03/31/2014

That Makes Two Of Us!

Following up some recent posts, Suzanne Goldenberg, an environmental correspondent for The Guardian, is quoted concerning the IPCC's latest bureaucratic tour de force regarding the economic impacts of anthropogenic climate change.

We just got to one of the really tricky sections of the report - how much will climate change hurt the bottom line? This is one area where there really isn't much hard data, because of a lack of reliability in economic models.

One number that is out in the report is that climate change will shave between .2 and 2% of global income, if warming remains at about 2C.

That is far lower than other economists say, and it opens up the question just now: why bother to cut greenhouse gas emissions at all if that's the limit of the cost?

Chris Field said those reports don't take into account the full range of impacts, or plan for what might happen with catastrophic climate events, such as the melting of the Greenland ice sheet.

"We certainly wouldn't anyone to come away from this report doing a simple comparative analysis comparing mitigation with the costs of adaptation," Field said.

Tallying the damage bill has long been hotly disputed among economists and scientists. In a paper last year, Professor Robert Pindyck from the Massachusetts Institute Technology concluded the so-called integrated assessment models used to combine climate science with economics have “crucial flaws that make them close to useless as tools for policy analysis”.

On the one hand, science has to deal with potential feedback trends unleased by global warming – such the run-away melting of the arctic permafrost releasing massive amounts of the potent greenhouse gas methane – that are essentially “unknowable”, Pindyck wrote.

On the other, the underlying assumptions economists use to guess how much climate change will cost are “completely made up”, he said.

Imagine the glee, then, that the sceptics (and their strident backers in the media) had when the final draft IPCC report landed for governments to pick over for approval.

Despite the litany of risks, economic costs were assessed to be a modest 0.2-2 per cent of gross domestic product. And that range wasn’t just at the 2 degree “guardrail” increase in temperatures the world’s leading nations had pledged to keep within, but at 2.5 degrees above pre-industrial levels.

However, in what passes as a slapdown in the diplomatic niceties of the United Nations overseeing the IPCC, the 0.2-2 per cent range by the final report is “presented in a way that is much more nuanced, and I believe, much more useful”, co-chair of the report, Stanford professor Chris Field, told Australian journalists.

The nuance, it has to be said, is not very subtle. The section on economics in the Summary for Policymakers starts with an added qualification: “Global economic impacts from climate change are difficult to estimate.”

It goes on: “Economic impact estimates... depend on a large number of assumptions, many of which are disputable, and many estimates do not account for catastrophic changes, tipping points, and many other factors.”

And the nuanced bit: “With these recognised limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0 per cent of income.” (Italics added).

“Losses are more likely than not to be greater, rather than smaller, than this range. (Italics in the original.)

In other words, there are good reasons not to read much if anything into ranges thrown up by economic models.

As Nicholas Stern - the UK economist who compiled the Stern Review of the economics of climate change in 2006 - noted in a paper last year that one of the standard models used to calculate costs produced only a 50 per cent reduction in GDP if global temperatures rose 19 degrees.

“This illustrates both the modest nature of damages and the perils of such extrapolation – it seems possible or likely that such temperatures could involve complete human extinction, indeed at much lower temperatures than that,” wrote Lord Stern, now at the London School of Economics.”

Answer: because not only did it not contain any talk but, as an added bonus, it was filled with good music!

Was that Michael Mann on guitar?

That was really a segue to the IPCC report. I was worried that (i.e. knew that) a partial sentence (0.2% to 2.0% global economic losses) would be one of the main quotes from the SPM. In context, it is virtually meaningless, so I don't know why it was included (maybe at the insistence of some countries' approvers). If anything had to be written, then the takeaway is that all that can be said about estimated economic losses is that they are likely to be more than 2% for an additional warming of 2 degrees (which would be 2.85 or 2.89 degrees above preindustrial - I don't know where the 2.5C figure comes from). But that's not even what the supposed target is.

well, if you want to have even more "fun" with economist's wrong-doings, read the following debunking of prof. Richard Tol here:

"However, when I examined Professor Tol’s paper in detail, I discovered that he had made a number of errors, wrongly plotting studies which had found net negative impacts as if they were positive benefits. Of the 14 data listed in Table 1 and plotted in Figure 1 of the paper, at least four were wrong."

"For this reason, I remain concerned about the following statement from the Summary for Policymakers from the report: “the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2% of income (±1 standard deviation around the mean)”. These figures are drawn entirely from Professor Tol’s 2013 paper, and without independent verification of the data currently being possible, I do not regard them to have been proven robust."